Maintain long positions. The HSIF tested the 24,372-pt day high, then saw profit taking before retreating lower to close near to the 24,039-pt day low – shedding 61 pts when compared with the previous day’s close. This minor retracement was acceptable, as the index had rebounded from the low of 25 Sep – 23,114 pts – to the latest high of 24,372 pts, a total rebound of 1,258 pts over eight sessions. The HSIF is currently trading above the 20-day SMA line, indicating early signs of a bullish trend. This short-term bullish trend is further encouraged, as the RSI has broken from its downtrend resistance line. Consequently, we maintain our positive trading bias.

Since the rebound is intact, we maintain our long recommendation. We initiated these positions at 23,951 pts, or the closing level of 6 Oct. For risk-management purposes, a tight stop-loss level can be placed below 23,800 pts.

The immediate support level marked at 23,800 pts and followed by 23,600 pts. On the upside, the immediate resistance is set at 24,600 pts – near the 50-day SMA line – and followed by 24,898 pts, ie the high of 16 Sep.

Source: RHB Securities Research - 12 Oct 2020